FISCAL POLICIES: OVERVIEW OF THE MAIN FISCAL CHANGES

The Law no. 296/2023 published in the Official Journal no. 977 of October 27, 2023, provides for fiscal-budgetary measures on which the government undertook responsibility in the Parliament and brings significant fiscal changes that may potentially have a strong influence on the activity of the economic operators.

These changes include provisions related to income tax, VAT, commercial transactions, and payment of the contributions. There follows a brief overview of the main fiscal measures, out of which some become effective as of November 1, 2023 and others starting with January 1, 2024.

Revenue / Profit Tax

- The tax on the revenues of microenterprises was modified as following:

• 1% revenue tax for microenterprises with the turnover capped to 60,000 EUR and excluding certain activities (such as, computer games editing, custom made software, hotels and other accommodation facilities, restaurants etc.)

or

• 3% revenue tax for microenterprises with revenues over 60,000 EUR or performing certain activities specifically provided under the law.

The prerequisite conditions to qualify as microenterprise are maintained (the number of employees, shareholdings of the shareholders in other companies etc.).

- The minimum 1% tax of the turnover for companies with a turnover exceeding 50 million euros (250 million RON)

This applies where the corporate tax (16%) owed by the company is less than 1% of turnover. The measure also concerns the group (from a tax point of view).

- The tax on the banks’ turnover (Romanian legal entities credit institutions and Romanian branches of foreign credit institutions – foreign legal entities)

• 2% rate for the period 01/01/2024-31/12/2025

and

• 1% starting with 01/01/2026.

The turnover is calculated by taking into account incomes from interests, dividends, fees and commissions and other incomes specifically provided under law.

Tax on movable / immovable goods

- Additional tax on high-value assets (real estate and vehicles):

• 0.3% tax on the difference between the taxable value of the residential building(s) owned by individuals (as established by the local tax body through the tax decision) and the amount of 2,500,000 lei (around 500,000 euros).
• 0.3% tax on the difference between the purchase value and the amount of 375,000 lei (approximately 75,000 euros) for cars belonging to natural or legal persons. The tax is due 5 years starting with the fiscal year of delivery/ receipt of the car, or for the remaining period up to the 5 years if the car was previously delivered / received.

VAT

VAT increase

• VAT is increased from 5% to 9% for show, concert, cultural or sporting events’ tickets, but also for the delivery of housing premises with net usable area of 120 sqm¹, excluding annexes, purchased by individuals and with a net value not exceeding 600,000 lei (120,000 euros) , the delivery and installation of photovoltaic panels, thermal solar panels, heat pumps and other high-efficiency, low-emission heating systems. A rate of 9% will also apply to the delivery of buildings, including the land on which they are built, intended as living facilities for the elderly and retirees, for children and recovery and rehabilitation centres for disabled minors..
• from 9 to 19% for alcoholic beverages, certain drinks such as non-alcoholic beer or foods with added sugar with a total sugar intake of at least 10 gr / 100 gr product.

Cash transactions

- Lowering of cash transaction limits

(these provisions will come into force from November 11, 2023)

Cash up / payments for companies

• lowering of the daily cash up limit from 5,000 lei to 1,000 lei between companies
• lowering of the daily ceiling for payments between companies, from 5,000 to 1,000 lei per day per company, but not more than 2,000 RON per day (while the current maximum limit for daily cash payments is 10,000 lei) 
• lowering the daily advance payment limit from 5,000 to 1,000 lei per day per person. Advances paid are considered in the calculation of the maximum daily ceiling
• lowering of the daily ceiling for cashing up /payments between companies and Cash & Carry stores, from 10,000 to 2,000 lei per day. If the value of invoices issued by Cash & Carry stores exceeds 2,000 lei, the difference between the 2,000 lei and the total value will be paid by cashless payment instruments.

Daily ceiling on amounts in company’s cash register

• the amounts in cash available in the cash register cannot, at the end of the day, exceed the ceiling of 50,000 lei; amounts exceeding this ceiling must be deposited into the account within 2 working days. This ceiling can only be exceeded with the amounts linked to the payment of salaries and other staff rights, for a period of 3 working days from the date scheduled for their payment.

Cash collection/payments between companies and individuals

• lowering of the ceiling on cash ups and payments accounting for deliveries or purchases of goods or services, dividends, assignments of receivables, other rights, loan repayments etc., from 10,000 to 5,000 lei to/from one person (from January 1, 2024) and from 5,000 RON to 2,500 lei, from January 1, 2025. Fragmented collections/payments are prohibited. The ceiling does not apply to deliveries of goods and services subject to instalment payment.

Daily ceiling on cash collection /payments for individuals

• lowering of the ceiling from 50,000 to 10,000 lei per transaction (from January 1, 2024) in the case of cash collection /payments for the transfer of ownership of goods or rights for the provision of services (granting/repayment of loans). From January 1, 2025, the ceiling will go from 10,000 to 5,000 lei.

Holiday vouchers and meal tickets

• Holiday vouchers: the amount goes up to 1,600 lei and the 10% health insurance contribution is due thereon while the beneficiaries are limited to people with the net income under 8,000 lei / month.
• Meal tickets: implementation of payment of the health insurance contribution (10%); limitation of fees involved in this distribution process.

Health and social insurance contributions

• Reintroduction of payment of the health insurance contribution (CASS) of 10% for employees in the construction, agriculture and agri-food sectors.
• Self-employed persons owe social security contributions (CAS), if they receive a net income with a cumulative value at least equal to 12 or 24 gross minimum wages at the country level.
• Self-employed persons owe the health insurance contribution (CASS) of 10% on the annual calculation base, represented by the net income received and which cannot be less than the ceiling of 6 salaries nor higher than the ceiling of 60 gross minimum wages at the country level. The CASS is deductible in the calculation of income tax. To determine the amount of CASS payment, the income from independent activities will not be combined with the income from other sources (dividends, interest, rent, etc.), subject to separate CASS contribution. The CASS is due even if the net income obtained by self-employed persons (PFA in Romanian) is lower than the ceiling of 6 gross minimum wages or if the PFA’s income should be negative.

The main changes concerning the tax advantages applied to sectors such as IT, construction, the food industry or agriculture have been widely covered in previous articles from GRUIA DUFAUT Office.

However, we remind you that the new provisions come into force from November 1, 2023 (the income pertaining to the month of November).

Note

1. The 9% tax rate applies to housing facilities hereinabove mentioned starting with January 1, 2025. The reduced 5% rate remains in force until then.